I sold TripAdvisor this week for several reasons:
- Revenue concentration
- Sale/IPO of Experiences business
TripAdvisor is still too dependent on Booking and Expedia. Booking and Expedia combined contributed 34%, 25% and 33% of TripAdvisor’s revenue in 2021, 2020 and 2019. New initiatives over the 2019-21 period such as TripAdvisor Plus and display advertisements appears to have limited impact in growing revenue. TripAdvisor Plus, the company’s attempt at a membership subscription was the latest effort to diversify revenue away from their core hotel meta-search product but hotels and consumer feedback have been disappointing.
Competing products from Google such as hotel, restaurant and attractions reviews are a growing threat. TripAdvisor has commissioned third party research which shows that TripAdvisor reviews are more detailed and relevant for businesses. I personally prefer TripAdvisor reviews but I suspect the average consumer finds Google reviews satisfactory.
I also suspect TripAdvisor is becoming less relevant as compared to Google Maps.
Take a look at this snapshot of the TripAdvisor app while I was looking for a restaurant at Jewel Changi Airport. Apart from the irrelevant advertisement (it’s for a restaurant outside of Jewel) at the top, each of these Jewel Changi restaurants had only a few reviews compared to Google Maps which had far more reviews per restaurant.
Sale/IPO of Experiences business
TripAdvisor is planning an IPO of their Viator, their experiences online tour agent (OTA) business to give better clarity on the growth and financial results of this segment. TripAdvisor has also agreed to let Booking.com sell experience ontheir platform. I think an IPO or allowing others to use their Experiences inventory is a mistake given their first mover advantage in aggregating these suppliers.
Bottomline: TripAdvisor has been having great difficulty monetizing their user traffic. Maybe they will eventually be able to reduce their reliance on Google search traffic and Booking/Expedia but I’m I have been a patient shareholder since 2018 so I think it’s time to move on. The loss on my investment was 18%. I used the proceeds to buy more Datadog and Fiverr shares.